Former CEO of the Rock mulls a bid

NBNK Investments is eyeing a bid for Northern Rock, City A.M. has learned.

The investment vehicle headed by Lord Levene had been ruled out of the running because it was forbidden from making a bid for the Rock for a period of 12 months after poaching its former chief executive Gary Hoffman last year.

However, City A.M. understands that the Rock auction is running well behind schedule, and so NBNK is considering entering the fray in October when its prohibition on bidding ends.

The loose timetable will help. An adviser familiar with the sale said: “It’s not at all clear as to price or process. And it’s not clear when it will become clear.”

If NBNK does decide to bid, it could have a significant advantage over rivals due to Hoffman’s familiarity with the assets.

News of another potential buyer will be welcome for the government given that the only known bidders so far are Virgin Money and JC Flowers.

The Rock posted a loss of £78.8m in its half-year results yesterday – a 44 per cent improvement on last year – and said it expects to return to profitability late in 2012.

It also reported a total equity value of £1.1bn, meaning that chancellor George Osborne is unlikely to get the £1bn he wants for the assets, let alone the £1.4bn injected into the bank by the government. With a sector discount of some 20 per cent and more losses on the way, a price around £850m is more likely.